Delta Air Lines reports strong first quarter as aviation resurgence continues

Delta Air Lines reports strong first quarter as aviation resurgence continues

Delta Air Lines has reported financial results for the March 2015 quarter, with the airline recording adjusted pre-tax income of $594 million, an increase of $150 million over the same period last year.

The airline’s adjusted net income for the March 2015 quarter was $372 million, or $0.45 per diluted share, and its adjusted operating margin was 8.8 per cent.

On a GAAP basis, Delta’s March quarter pre-tax income was $1.2 billion, operating margin was 14.9 per cent and net income was $746 million, or $0.90 per share.

Results include $136 million in profit sharing expense, recognizing Delta employees’ contributions toward meeting the company’s financial goals.

The company used its strong cash generation in the quarter to return $500 million to shareholders through dividends and share repurchases and to make $904 million in pension contributions.

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“Delta’s business is performing well, producing the best March quarter, both operationally and financially, in Delta’s history,” said Richard Anderson, Delta chief executive officer. 

“While the strong dollar is creating headwinds with international revenues, it also contributes to the lower fuel prices which will offset those headwinds with over $2 billion in fuel savings this year. 

“We are looking at June quarter operating margins of 16-18 per cent with over $1.5 billion of free cash flow - these record results and cash flows show that the strong dollar is a net positive for Delta.”

To address currency headwinds, Delta plans to reduce its international capacity by three per cent year over year for the winter schedule. 

These international reductions, combined with two per cent domestic growth, will result in flat system capacity for the December quarter. 

Capacity adjustments will be focused on markets that have been most affected by the strong dollar and markets where demand has been negatively impacted by the decline in oil prices. 

Key actions for the December quarter will include a 15-20 per cent reduction in service from Japan, a 15 per cent reduction to Brazil, a 15-20 per cent reduction to Africa, India and the Middle East, and suspension of service to Moscow for the winter season.